A major care home chain has stopped charging grieving families fees for a month after their relative has died following a damning report.

Maria Mallaband Care Group, which runs 64 care homes, said in future it would only charge up to the date of death after a watchdog investigation exposed how middle-class families are being fleeced by many firms.

The Competition and Markets Authority (CMA) found the charging of 'death fees' totalling thousands of pounds was widespread across the sector.

Maria Mallaband Care Group, which runs 64 care homes (including the Windmill Rolling care home pictured), said in future it would only charge up to the date of death after a watchdog investigation exposed how middle-class families are being fleeced by many firms

Maria Mallaband, based in Leeds, only charged relatives of residents who covered their own costs – not councils who paid the charges of those entitled to free care.

The CMA warned Maria Mallaband was only the first firm to back down and said many others are still charging the fees for weeks after care home residents have died.

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Those that do not amend policies could face legal action if rules change after a CMA consultation.

Michael Grenfell, executive director for enforcement at the CMA, welcomed Maria Mallaband's response, adding: 'We expect other care homes to make any necessary changes in line with our final views when published.

'We now want to hear from families and care homes as part of our consultation.'

A Maria Mallaband spokesman said it welcomed the investigation and had 'constructively taken voluntary action as we deemed appropriate'

The CMA's report last November also found that middle-class care home residents are being forced to pay huge up-front fees of up to £5,000 to keep the ailing sector afloat.

Once they get a place, self-funders are then having to pay 40 per cent more on average than councils do – a typical increase of £12,000 a year.

Alex Hayman, of consumer group Which?, said: 'Care home providers must take note of this decision as the first step to phasing out all unfair and excessive charges for residents.'

A Maria Mallaband spokesman said it welcomed the investigation and had 'constructively taken voluntary action as we deemed appropriate'.